Europe Economy

Asia's Rich Outpace Europe as Global Wealth Rebounds

The number and bank balances of the world's millionaires have rebounded to above pre-crisis levels, but demographic and geographical shifts are changing the face of global wealth, according to a report on high net worth individuals by CapGemini and Merrill Lynch, released Wednesday.

The number of high net worth individuals (HNWIs), defined as individuals with investable assets of more than $1 million, grew by 8.3 percent between 2009 and 2010, compared to just 0.2 percent between 2007 and 2009, according to the World Wealth Management Report 2011. Total wealth held by HNWIs grew 9.7 percent in the same period.

Asia-Pacific has, for the first time, surpassed Europe in both the number and the wealth of HNWIs, the report said.

Growth in Africa and Middle East markets was strongest, with the number of HNWIs increasing by 11.1 percent and 10.4 percent, respectively. Asia-Pacific saw growth of 9.7 percent in the number of HNWIs and 12.1 percent in total wealth, taking the region above Europe in both categories.

North America saw growth of 9.1 percent of total wealth and 8.6 percent of the number of HNWIs, while 53 percent of all HNWIs are in three countries – the USA, Japan and Germany, the report said. China's growth has seen it accumulate 535,000 HNWIs, and India 153,000.

Hong Kong led the world in growth, with a 33.3 percent rise in the number of wealthy individuals, which the report attributes to more aggressive investment styles, meaning that HNWIs are strongly exposed to the country's well - performing real estate and  stock markets.

The accumulation of wealth in emerging markets is reflective of the strong growth in those regions, but even so, US and European HNWIs have managed to outperform their home economies, the report shows.

"In the emerging economies, reinvesting in the local opportunity has been a theme, whereas the mature markets have been reinvesting their funds in the emerging market, so I think the GDP, although a major driver, will be regionally opportunistic," Adam Horowitz, head of UK, Ireland and Israel wealth management said at the report's launch.

Even though wealth preservation is cited as an increasing concern of the HNWIs, overall, risk appetite increased among the group, causing them to return to 2007 levels of equity investing, the report said.

The demographics of wealth are changing, reflecting the younger populations in emerging markets. The number of female HNWIs is also gradually rising, the report notes. Both these demographic shifts will need to be addressed if wealth management firms are to capitalise on the new shape of wealth, Alan Walker, head of financial services consulting at CapGemini, said.